Infosys in a world of Amazon, Workday and Foxconn

“It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”

When he arrived from SAP I was excited he would bring an IP centric mindset to a company which, in many ways, carries the pride and the burden of employing ever increasing volumes of human labor in its populous home country. I was also concerned his enterprise software background would bring along expectations of sky high gross margins.

The reality is he tried to turn around a company which is caught in a time warp.

In the 90s and early 2000s, Infosys delighted its customers. Its CMM Level 5 and Six Sigma certifications showed in productivity in the form of tangible cost reductions and lowered code error rates. In my opinion, one of the worst things to happen to Infosys was the glowing coverage in Tom Friedman’s book The World is Flat. The Bangalore campus became a tourist spot to bring government leaders from around the world as a showcase of India’s software capabilities. This went to Infosys’s head, even as performance on customer contracts was declining and labor teams and cost grew more and more.

I saw this first hand when I took CIOs to Bangalore. Infosys would talk with pride about the campus and the accolades and usually pull in some of the founders and early executives. In moderation, nothing wrong with that but when it took a couple of hours out of the day, it did not help present their credentials for the specific projects the clients needed help on.

Then, you saw a wave of underwhelming presentations at Oracle Open World in the 2010-13 timeframe. After paying millions for the pole position just prior to Larry Ellison’s talk, the pitches, many by early executives would literally put the audience to sleep. You could see the firm was slipping while clinging to its version of a glorious past. (the keynotes at OOW improved a bit when Vishal took over)

All this while Amazon was redefining “continuous improvement” with 50 price cuts over a decade around its cloud storage and compute services. Workday was taking an average of 5 employees to support every customer, using its multi-tenant model and in-background upgrades to delivering ever improving functionality to all its customers. Other SaaS vendors were delivering similar efficiencies. And Foxconn was delivering billions of high quality Apple and other devices under intense delivery and secrecy pressures. Even in a country like China which like India has to encourage labor -centric models, Foxconn was rolling out robotics and precision equipment.

In a comment, Infychallenger says the “world has changed from commodity to digital” and Infosys has not kept up. Actually, only a fraction of the world has. Even though I write plenty about innovation, most of IT is stuck in 15, 20, 30 year old tech. Way too many companies define digital narrowly – social media or web commerce. The truly transformative companies are making their own products and services smarter, turning their business models upside down and looking at new automation as they rethink supply chains, and move to advanced manufacturing concepts. These innovators are not using Infosys (and in fairness most other outsourcers). But they do want Amazon, Workday and Foxconn type efficiency in their back offices.

In 1995, Michael Treacy and Fred Wiersema wrote their best seller “The discipline of market leaders”. They argued dominant companies picked one of 3 focuses – operational excellence, product leadership or customer intimacy. Can Infosys become a product leader without beaucoup, particularly industry and geography specific, IP? Not likely. Can it become customer intimate? Possibly, but not with a headcount of 200,000.

Infosys could again become an operational efficiency leader like it was twenty years ago. But it would need to do that with a heavy focus on automation. Vishal tried that in small doses and even that met resistance. Its time for Infosys to become an operational leader like it used to be not just wallow in the glory of what it was.

Comments

“It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”

When he arrived from SAP I was excited he would bring an IP centric mindset to a company which, in many ways, carries the pride and the burden of employing ever increasing volumes of human labor in its populous home country. I was also concerned his enterprise software background would bring along expectations of sky high gross margins.

The reality is he tried to turn around a company which is caught in a time warp.

In the 90s and early 2000s, Infosys delighted its customers. Its CMM Level 5 and Six Sigma certifications showed in productivity in the form of tangible cost reductions and lowered code error rates. In my opinion, one of the worst things to happen to Infosys was the glowing coverage in Tom Friedman’s book The World is Flat. The Bangalore campus became a tourist spot to bring government leaders from around the world as a showcase of India’s software capabilities. This went to Infosys’s head, even as performance on customer contracts was declining and labor teams and cost grew more and more.

I saw this first hand when I took CIOs to Bangalore. Infosys would talk with pride about the campus and the accolades and usually pull in some of the founders and early executives. In moderation, nothing wrong with that but when it took a couple of hours out of the day, it did not help present their credentials for the specific projects the clients needed help on.

Then, you saw a wave of underwhelming presentations at Oracle Open World in the 2010-13 timeframe. After paying millions for the pole position just prior to Larry Ellison’s talk, the pitches, many by early executives would literally put the audience to sleep. You could see the firm was slipping while clinging to its version of a glorious past. (the keynotes at OOW improved a bit when Vishal took over)

All this while Amazon was redefining “continuous improvement” with 50 price cuts over a decade around its cloud storage and compute services. Workday was taking an average of 5 employees to support every customer, using its multi-tenant model and in-background upgrades to delivering ever improving functionality to all its customers. Other SaaS vendors were delivering similar efficiencies. And Foxconn was delivering billions of high quality Apple and other devices under intense delivery and secrecy pressures. Even in a country like China which like India has to encourage labor -centric models, Foxconn was rolling out robotics and precision equipment.

In a comment, Infychallenger says the “world has changed from commodity to digital” and Infosys has not kept up. Actually, only a fraction of the world has. Even though I write plenty about innovation, most of IT is stuck in 15, 20, 30 year old tech. Way too many companies define digital narrowly – social media or web commerce. The truly transformative companies are making their own products and services smarter, turning their business models upside down and looking at new automation as they rethink supply chains, and move to advanced manufacturing concepts. These innovators are not using Infosys (and in fairness most other outsourcers). But they do want Amazon, Workday and Foxconn type efficiency in their back offices.

In 1995, Michael Treacy and Fred Wiersema wrote their best seller “The discipline of market leaders”. They argued dominant companies picked one of 3 focuses – operational excellence, product leadership or customer intimacy. Can Infosys become a product leader without beaucoup, particularly industry and geography specific, IP? Not likely. Can it become customer intimate? Possibly, but not with a headcount of 200,000.

Infosys could again become an operational efficiency leader like it was twenty years ago. But it would need to do that with a heavy focus on automation. Vishal tried that in small doses and even that met resistance. Its time for Infosys to become an operational leader like it used to be not just wallow in the glory of what it was.